Innovating from within

Companies are empowering staff at all levels of authority to contribute key ideas and strategies and the resulting intrapreneurs can benefit businesses in multiple ways, writes Ben Lobel.

In lean times, new and fresh ideas are king, and if your company promotes an environment that encourages innovation from all levels of hierarchy, the perks can be manifold. From affording staff more freedom in their role to having the chance to invest in an employee’s innovation, instilling a culture of ‘intrapreneurship’ can be a good idea on many levels.

Steve Newhall, managing director of talent management consultancy DDI UK says that one of the challenges organisations face today is that the ‘half life’ of good ideas just gets shorter and shorter – meaning more and more are needed. He says, ‘Whereas 15 years ago a good idea may have given you five or ten years of revenue stream, that may not be the case today. You have to generate more ideas, more quickly to stay ahead of the curve and stay competitive. So creating an environment in which that can happen is necessary for all organisations.’

This is the ethos at accounting software systems company Access UK. CTO Stuart Allsopp says, ‘We like to instil a culture of innovation all the way through the company, and we encourage breaking the boundaries of a job role [to encompass the generation of new ideas], because we get the brightest ideas from the people at the coalface doing the job.’

Access UK employee David Humphreys started in the support department helping resolve customer issues, but was given the opportunity to develop several software projects after he identified potential opportunities where Access could improve its customer experience.

After demonstrating a prototype for mobile software he had produced in his own time, Humphreys was given time to work on the project, which led to a job being created for him in the development team, allowing him to continue and extend the software.

The utilities that Humphreys developed have improved the customer experience, helping to reduce the number of customer support calls and improved efficiency, making support engineers’ jobs at the company easier.

By encouraging an intrapreneurial culture, Allsopp says that he receives seven or eight ideas a year from staff that are worth thinking about commercially. He adds, ‘While we don’t allow them to drop everything and get on with it, we give them a little rope and see where it can go.

‘As a manager you have to talk to the team within your business and let them know that the door is open for new ideas, and once you do that you’ll be amazed at what can come through.’

EMI share scheme

While intrapreneurship can mean affording your staff the freedom to come up with new ideas for the company, it can also mean giving employees the chance to start ‘sub businesses’ of their own.

Recruitment company Eximius Group uses an Enterprise Management Incentives share scheme system whereby recruiters in the firm can opt to reinvest a proportion of the profit they generate into hiring people to help them build their revenues further. If they hit their revenue targets over a three-year period they are awarded 20 per cent of the shares in the ‘business’ they have built, the value of which can be realised at the point of a planned equity sale down the line.

The resulting atmosphere is one in which staff employed on an equity share scheme effectively create their own business and revenue stream, employing more and more people to help as they grow and are subsequently paid not only on the top line revenue they produce but receive a profit share bonus too.

CEO Nick Stevens says, ‘We have thought from the outset that as management we would rather build a bigger pie and accept a smaller slice of it, engendering a culture of ownership and excitement than an ‘us and them’ working environment between directors and employees.’

An opportunity for investment

An added incentive for company stakeholders to encourage intrapreneurship is when there is an opportunity for investment up for grabs. Media technology company Forward Internet gives its developers up to 20 days per year of ‘innovation leave’, allowing them to take time off their main projects to work on their pet projects, which often have the potential to turn into main projects within the company which Forward would then finance.

Robin Landy was originally hired as an information architect to work on a mobile phone comparison site under the umbrella of Forward, but he found himself thinking more about launching his own price comparison venture, Invisible Hand. However, he did not consider leaving to work on his idea. ‘The company has a great level of technical expertise; I thought that I was already in the right place to develop the product and due to the culture of the company in encouraging intrepreneurship I wanted to stay,’ he says.

After Landy built a prototype and pitched the idea to his managing director, the company agreed to finance it in exchange for an equity stake.

Other innovations to come out of the company include a luxury parrot cage that grew to be the biggest parrot cage retailer in the UK and energy comparison site uSwitch. ‘You don’t have to seek permission to try something new,’ says Landy. ‘There is a supportive environment for new projects; you know you can go out, experiment and take the time to do it.’

Learning from a startup

Ideas generated within a company do not have to relate directly to its core activities to benefit the business. Market research business MBA & Company allows employee Romy Fawehinmi to work for one day a week on his startup company, a rental property platform for students that has been through a round of VC funding.

The company draws on the experiences of Fawehinmi’s startup and uses them to its own benefit. CEO Daniel Callaghan says that Fawehinmi has come up with a highly successful viral strategy for his own company and in turn shared the knowledge to boost MBA & Company’s social media campaign. ‘We’ve seen our Twitter traffic increase substantially since he started on his company as we have seen what he has done on his own venture and have benefited from his learnings,’ says Callaghan.

Callaghan adds that allowing intrapreneurial benefits is a good way of keeping staff enjoying working. ‘If you give people freedom as opposed to trying to control them you maintain a greater sense of loyalty.’

He also notes the value in being in the presence of other strategic thinkers. ‘As a small company you want entrepreneurs around you – people who are always looking for new means of growing a business and who can handle some of the uncertainties businesses are facing today.’

It is clear that while some businesses thrive on the concept of empowering staff to make key decisions, others may feel their situation is less conducive to intrapreneurship. Newhall says, ‘Organisations sometimes focus too much on skills employees need and think they need to hire people in when really they should just focus on the environment that is going to stimulate high levels of creativity and innovation.’

For the good of commerce in Britain and the subsequent much hoped-for private sector growth, many such companies would do well to revise their stance on intrapreneurs and what they bring to the table.

Innovate or Perish

A study by the Institute of Directors shows that more than half of business leaders believe economic pressures are forcing British companies to be more innovative to get ahead of the competition.

It’s not the first time in recent weeks that small companies have faced a call to wise up or lose trade. Recently, entrepreneurs were urged by William Hague to get on planes and sell internationally – after effectively being branded as lazy and unproductive. It’s as if small businesses are expected to move seamlessly from fighting to keep the wolf from the door to becoming innovators and export superstars.

According to the research though, such small operators are the best-positioned to make this transition. Businesses with between ten and 100 employees are most likely to capitalise on innovation and this is something the majority of respondents (54 per cent) put down to the freedom to think creatively and a less rigid structure this size of business benefits from.

Businesses with more than 250 employees, on the other hand, are expected to be the least creative despite their larger talent pools and budgets.

Despite the relative agility of small operators though, it is the larger businesses that are most likely to recognise the link between growth and creativity with 73 per cent of this group making the connection compared to 61 per cent of directors with less than ten employees.

When it comes to competing on the international stage, it is encouraging that most business leaders (67 per cent) consider that UK plc measures up well internationally when it comes to creativity and innovation. But if the smallest operators can’t see the need to innovate and think outside the box, it’s hard to imagine such businesses being equipped to succeed in such foreign markets.

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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